Can Gaza now create a viable economy?

The fleet of Palestinian airplanes - a total of four - is as grounded as the paperweight plane on Salman Abu Halib's desk.

The chairman of the Palestinian Authority's Civil Aviation Authority, Mr. Abu Halib says that for Israel's withdrawal from Gaza to have a real impact, Yasser Arafat International Airport must be rebuilt and open for business to allow for freer movement of goods and people.

"From our point of view, the Israeli withdrawal will not be worthy if the Palestinians cannot reopen the airport," Abu Halib says.

As Israel prepares for the final stage of the Gaza withdrawal, expected to be complete by Sept. 15, Palestinians and Israelis have yet to agree on key elements of the new Gaza economy - who controls the borders and what is allowed to come and go.

Palestinian officials want to control their own crossing points, to fly their own planes, and to make Gaza a port of call.

Israel, for its part, has agreed in principle to the construction of a Palestinian seaport, although no arrangements or protocol have been set yet.

But the airport, as well as the crossing points, is viewed as a much more delicate matter. Security officials fear that by opening access, Palestinian militants will find it easier to smuggle arms into the territories, and that members of international extremist organizations such as Al Qaeda could make inroads in a Palestinian-ruled Gaza of the future. An Israeli aviation official said that the airport was the subject of negotiations.

Israel has also proposed allowing a one-way flow of traffic from southern Gaza to Egypt at the Rafah Terminal. Wednesday, Israeli Cabinet ministers proposed new arrangements for the Gaza-Egypt border, raising the possibility that Israel would eventually agree to the movement of Palestinians under the supervision of foreign inspectors, without an Israeli presence. The plan still needs to be approved by the Israeli Cabinet.

Five years ago today, Palestinians with means were able to fly to local destinations in the Middle East. But the start of the second intifada, at the end of September 2000, violently halted seven years of shaky Israeli-Palestinian peacemaking.

By January 2002, amid cycles of bloodshed that shifted between Palestinian suicide bombings and Israeli military raids, the Israeli army had bombed the Palestinian air traffic radars and bulldozed the runway.

Now, Abu Halib is planning ahead. A new cargo terminal is being built with a $25 million donation from the EU, as well as a new passenger terminal funded by Japan. He says the PA would like to privatize both the airport and the airline, in order to raise money it simply doesn't have. But for anything to move forward, he adds, plans to reopen must be worked out with Israel.

"This is not a military airport," Abu Halib says. "We are not using F16s or Apaches. This is the main point of crossing of the Palestinians to the outside world." As such, he says he will applaud Israel's historic withdrawal from Gaza only when Palestinian planes are free to fly again. "Otherwise, Gaza will just remain a big prison."

Abu Halib's Gaza office is perched on the top floor of a building from which it is possible to see dust rising on the horizon - the marks of homes in recently evacuated Israeli settlements being razed.

It is an image that has caused a kind of cautious jubilation, mostly marked by a carpeting of competing victory posters - pasted up by Hamas and Al Aqsa Martyrs Brigades claiming credit for the withdrawal. Palestinians here, warily waiting to take over the land once occupied by settlements, say that the true test of change will be how feasible it will be for people and products to go in and out.

But some Palestinians here say Gaza's economic recovery is not solely dependent on Israeli policy, but also on internal reform within the PA.

"What we are witnessing now is a state of deterioration and lawlessness," says Khalid Abdel Shafi, the head of the Gaza office the United Nations Development Program. "There is no security for business, conflicts are settled through families and not through courts, crime is spreading."

That lawlessness was evident Wednesday when militants dragged a former security chief - a cousin of the late Palestinian leader Yasser Arafat - out of his home and shot him dead. While the shooting may have been score-settling, it represents a challenge to the state of law-and-order in the Palestinian territories.

"Without reform and the rule of law, it is impossible to do the work - and that's an issue that is totally related to the Palestinian Authority. They need to do their homework to make these conditions possible," says Mr. Abdel Shafi.

The first internal test will be what the PA chooses to do, for example, with the new land and water resources it stands to inherit when Israel vacates Gaza. To make use of the greenhouses built by Israeli settlers and now being turned over to Palestinian ownership, says Abdel Shafi, the resulting produce needs direct access to the Israeli market.

Samir Abu Mudalalah, an economist overseeing PA policy on the withdrawal, says now is a time to create jobs in Gaza itself. One place to start, he says, is with all of the 56 percent of Gazan factories that have been "disabled" over the past five years. Of those, he says, 16 percent were destroyed in the Israeli-Palestinian violence, while the other 40 percent became inoperable due to lack of ability to move goods in and out of Gaza.

• Wire reports contributed to this article.